Wednesday, 31 December 2008

2008 Predictions - How did it all turn out?

OK, so in 2007 we had a stunning year, getting three quarters of our predictions right. This year has been the most eventful of my life so I doubt we are going to do as well. On New Year's Day we will have our predictions for 2009. Today is a review of 2008:

CU's first:

1. "shares will end the year in the 6000's just as now" - ooops. Shares at 4400. What was I thinking. I lost here too, my share portfolio for the year is 20% down - better than the market, but still a horror show. Last few months I have turned it around (was 50% down at one point) by being a lot more bearish....

2. "On the currency front....it will be more like 1.80 to the dollar and 0.70 against the Euro by mid-year." As predictions go this was spot on, even better I said after mid-year would be unpredictable!

3. Politically in the UK, there will be no election and Gordon Brown will still, unfortunately, be Prime Minister this time next year. Tick

4. "The UK Housing Market will slow much faster than most economists are predicting and the overall rate might touch 20% by the year end. Those viewing the market are not factoring in the role of psychology enough into the falling market." Official rates vary here from 12% to 18%. However, estate agents I know say real reductions are 30%. Overall, I said it would be worse than people thought, I was right.5. Barak Obama will win the Democratic nomination for President and then go on to be elected as the 44th President of the USA. Tick, when I said this Hilary was clear favourite. My odds on Obama were 3-1.

6. "Northern Rock will be nationalised (officially, it already is in many ways) as ways to try and get a private buyer founder. This will be the biggest government crisis and will cost Alistair Darling his job as Chancellor in 2008." Well, half-right. It was the biggest crisis until October, but Darling remains and things got a lot worse. No tick.

7. The credit crunch will continue long into the year and the credit retraction will cause a recession in the US and below inflation rate growth in the UK, which will only just avoid the two consecutive quarters of negative growth that defines recession. No Tick! things got far worse after Lehman's in October, but dodgy Government figures nearly got us out of technical recession.

8. The UK Government will raise taxes quite heavily, probably on motorists and luxury taxes, in the budget to try and balance the books. There will be more public sector strikes as the government attempts some desperate controls on the spending tiger it has unleashed. No Tick, massive wishful thinking on my part, perhaps this idea was a year to early. I never imagined the spending unfunded binge would get like this!

So for CU 4/8, big disappointment from last year...Must do better in 2009 (personal finances demand it)

Now for ND...

1. France will formally propose an EU nuclear power policy, which will include the EU picking up the tab for decommissioning. This has happened in proposal, not sure if it will get approval, although the EDF buy of BE makes it more likely. Tick

2. after the Olympics Russia will make a provocative intervention in another country, just to prove it can -wow, huge call spot on, bonus tick I say.

3. there will be unrest in China, and the government will feel confident enough to suppress it, even during the Olympics - yup, hear of Tibet? Tick.

5. shipping freight rates (a major component in bulk commodity prices over the past few years) will collapse - perfect, 95% down from their highs now. Tick.

6. there will be a return of the lengthy 1970's style strike in the UK public sector (hey, I agree with CU on something !) - No tick, a year early per chance.....

7. the US balance of payments will improve considerably - umm, oh dear, some issues with this one to do with the global meltdown. No tick.

8. sub-prime losses and spill-over consequences will amount to $ 0.5 trillion. Can't give a tick for this, likely losses now $2 trillion and counting. Do you remember just a few months ago when a trillion dollars was a lot of money?

9. sovereign funds will run riot in collapsing western equity and finance markets - and the $ will be welcomed rather than resisted. This is a tick. the SWF's got hammered when they tried to run riot, but nonetheless they are still getting in and will do more as prices fall. Brown went begging to Saudi....

ND 6/9 and a bonus tick. I will follow his advice more closely this year that is for sure.

C@W overall 10/18 - 55% down from 75% last year. Not so hot as last year but considering the insanity of it all we did good. The calls on Russia, oil, Gold, UK housing and freight rates were particularly good.

11 comments:

I don't think that the US not acting to prevent the collapse of Lehman was predictable so that excuses a lot of the end of 2008 predictions.

I think next year will be better than most commentators think, partly because it couldn't possibly be worse. Around mid year asset prices will find a floor and the stock markets will anticipate the coming recovery. FTSE to be 5000+ at year end.

in my defence on sub-prime losses, 12 months ago the highest 'official' estimate was $ 175 billion. If anyone had predicted 10 times that amount it would have been assumed they'd lost a decimal place (as well as their marbles)

Oh dear. Your re-publication of last year's comments reminds me of a short and painful purchase of Indian banks on weakness. Luckily I changed my mind on Russia when it appeared I was the only one in the queue to buy shares. Got the currency calls correct, though.

2009: Stockmarkets will bottom in Q4, 15-20% cheaper than they are now. Gold will fail above $1000 again. Sterling will bottom 20% below current levels. Gordon will talk about legislation to surcharge bankers' bonuses going back to 2005. No general election. Global Warming hysteria will peak and governments of all types will start rowing backwards on commitments and expenditure to this discredited new religion. Obama will end 2009 with an approval rating <40%.

Obama will close guantanamo bay, knowing US judges will reject evidence obtained under duress there most of the inmates will be quietly bundled away to even worse hell-holes in the third world dictatorships the came from who don't want terrorists walking the streets. The liberal media will praise their new messiah.

Pakistan will go tits up again.

China will extend their influence into Bangladesh.

Zimbabwe will go even more tits up and the social problems will spread further into neighbouring countries.

War will escalate in the DR Congo

Everyone will ingnore all this and spend most of the year arguing abour Israel and Palestine.

Shares will wobble less severely than 2008 but there will be money to be made if you can pick the right stocks.

Obama will spook the currency markets by borrowing and spending too much.

Gold will be a reasonably safe spread or cfd bet providing you don't go mad and use a decent margin, but if you buy it in dollars you'll just have put your money under the matress.

Brown will throw our money at RBS and HBOS like there is no tomorrow but life will go on and the great unwashed will still think he is doing a good job.

The short-selling ban will be extended because the cabinet won't like the idea of us shorting their banks.

A load of career board member labour sympathetic numpties that don't really care about us will be appointed to run UK Financial Management and will make a tosh of it.

In mid to late 2009 the IMF will warn Brown he's going to bankrup the UK and they haven't got the cash to bail him out, but he'll just do it anyway.